While Wall Street’s facade is transforming amidst the credit crunch, banking giants such as Barclays and JP Morgan enjoy their reinforced power. JP Morgan, with the acquisition of one of US largest banks, Washington Mutual, raised to become nation’s second largest bank, behind Citigroup Inc. On the other hand, Barclays, the UK bank, enters the US market with the purchase of Lehman Brothers and raises to the league of world’s top 10 investment banking businesses. Although its logo adorns the renowned Lehman building on Wall Street, Barclays seems far removed from vanity. Last week at the Clintton Global Initiative (CGI) Annual Meeting, held in New York, President Bill Clinton anounced that Barclays will make a three-year commitment amounting USD 20 million to provide community financial services across Africa, Asia and Latin America.

With all due respect to skepticism on Wall street, access to financial services still remains vital for sustainable economic growth. 2 billion people in the world, of which 20 million are in US, don’t have savings accounts, let alone checking accounts, nor do they have access to credit and insurance services. Microfinance has enabled borrowing and saving schemes for those with entreprenerial skills but without any means to realize them. What may be considered part of much debated philontrocapitalism, the work of microfinance institutions, depends on small-scale lending and business development. Keeping the emphasis on “small-scale” in mind, the direct involvement of world-class financial players in microfinance has raised potential issues of corruption and mission-drift.

Against all doubts on commercial bank involvement in providing saving and loans services to poor people, Barclays has followed a more laudable path. The UK finance giant funds the Katine project that started out in 2007 as a joint project between Barclays, the Guardian Media Group, and African Medical and Research Foundation (AMREF) to develop socio-economic sustainability in north-east Uganda. What makes Barclays’ involvement without fault is that it works through the existing savings and loans associations rather than trying to expand Barclays’ branches (even if it did, Katine people are so poor that they would not be qualified for any of the bank’s services). The UK finance giant supports Village savings and loans associations (VSLAs) that are set up in the region by the humanitarian organization, Care International.

Run and set up by groups of 15-20 people, VSLAs act as banks where debtors are also the creditors. Each member deposits a fixed amount of money on a regular basis, that adds up to a sum of available money for credit. From that sum, members can borrow, usually on short-term basis and with high interest. At the end of each year the members are paid back their money with added interest.

Self-owned and self-financed, VSLAs proved to be a major success and with Barclays’ USD 20 million commitment, the Katine project will be replicated in other developing regions. As for the bank’s impact on its subsidiaries, Barclays has already started looking for ways to incorporate Lehman’s charity expenses, which amounted to USD 39 million last year, compared to Barclays’ USD 108 million.